Terms
Define Service
An activity or action that satisfies human wants and needs.
What is supply and what is demand?
•Ability and willingness of consumers to pay for goods and services
•Ability and willingness of producers (suppliers) of goods and services to offer those goods and services (and quantity produced)
Which economic system is most controlled by the laws of supply and demand?
Market economy; Free market economy
What answers the 3 economic questions in the command system?
The government
Define Scarcity
When human wants or needs for goods or services or resources exceed what is available. When there isn't enough of something needed or wanted.
Classical Economics was a rejection of what style of economics?
Mercantilist and command-style economics run by monarchs
Which economic system provides goods and services to the public at little to no costs?
Command economy
What is the main economic problem that societies face?
How to make the best use of limited resources. How to satisfy needs and wants with limited and finite resources.
Define consumer
The people who buy or use goods or services
What does Laissez-faire mean?
A concept that opposes government intervention in business and economics.
What are the 3 economic questions every society must answer?
1) What goods and services should be produced?
2) How should these goods and services be produced?
3) Who consumes these goods and services?
What does orthodox mean in economics?
Define producer
The people who grow, make, or provide goods and services
By cutting taxes and increasing government spending to increase consumer demand. This should get more people and business spending money again. This should happen during economic depressions.
In which economic system do we see government intervention in certain areas?
Mixed economic system
According to Marx, the difference between the cost of producing a product and the price capitalists sell it for is called what?
Surplus value- it is the capitalists pursuit of profit and does not properly reflect the work involved. It is an example of exploitation of workers.
Define "input and" "output"
Input: resources used to create goods and services.
Output: a quantity of goods or services produced in a certain time by a business or industry.
What is bounded rationality?
People are less rational/logical than classical economists would argue and we are limited by time, our mental capacity, biases, effort, access to information, etc. when we make decisions
Within mixed economies, we see "capitalist leaning" and "socialist leaning."
What does this "leaning" describe?
Capitalist leaning: mixed economies that tend to have less government intervention
Socialist leaning: mixed economies that tend to have more government intervention.
It does not provide for people who cannot produce on their own, it does not provide for public goods, and workers/businesses face uncertainty as there is always competition.
These sound like disadvantages of which economic system?
Market Economy, Free Market System, Capitalism